I.T.O.((TDS) WARD -2(2), AMRAVATI V. THE COLLECTOR, AMRAVATI

ITA 379/NAG/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4507 (ITAT-NAGPUR)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 08-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Reasonable cause; Non compliance
• Section: 12

Judgement Text

1 ITA NO. 379/NAG/2016. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 379/NAG/2016 ASSESSMENT YEAR : 211 - 12. THE INCOME - TAX OFFICER, THE DISTRICT COLLECTOR, (TDS), WARD - 2(2), AMRAVATI. VS. AMRAVATI. TAN NGPCO299 9 D APPELLANT. RESPONDENT. APPELL ANT BY : SHRI A.R. NINAWE. RESPONDENT BY : NONE. DATE OF HEARING : 0 4 - 10 - 2016 DATE OF PRONOUNCEMENT : 4 TH OCT., 2016 O R D E R. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 17 - 03 - 2016 AND PER TAINS TO ASSESSMENT YEAR 2011 - 12. THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(APPEALS) IS JUSTIFIED IN DELETING THE PENALTY OF RS.11,44,348/ - FOR THE ASSTT. YEAR 2011 - 12 LEVIED U/S 271CA OF THE I.T. ACT? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE PENALTY WITHOUT APPRECIATING THAT THE ASSESSEE ADMITTEDLY COMMITTED THE DEFAULT OF NOT COLLECTING TCS IN TERMS OF SEC. 206C OF THE ACT? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) IS JUSTIFIED IN HOLDING THAT THE DEFAULT IS TECHNICAL DEFAULT WITHOUT APPRECIATING THAT THE ASSESSEE FAILED TO PROVE ANY REASONABLE CAUSE FOR THE DEFAULT EXCEPT STATING AND WITHOUT PROVIDING THAT IT IS A TE CHNICAL DEFAULT? 2. IN THIS CASE THE AO NOTED THAT THE ASSESSEE WAS REQUIRED TO COLLECT TAX AT SOURCE DURING THE F.Y. 2010 - 11 BUT THE SAME WAS DONE IN THE MONTH OF JULY, 2 ITA NO. 379/NAG/2016. 2011 WHICH WAS BEYOND THE PRESCRIBED DATES AND HE THEREFORE REQUIRED THE ASSESSEE TO S HOW CAUSE AS TO WHY PENALTY U/S 271CA SHOULD NOT BE IMPOSED. THE ASSESSEE SOUGHT TIME IN VIEW OF LOKSABHA ELECTION WERE UNDER WAY DURING THAT PERIOD AND THAT THEREFORE THE COLLECTOR OFFICE WAS BUSY WITH THE SAME. THE AO AFTER GIVING OPPORTUNITY TO THE ASSE SSEE EVENTUALLY PASSED THE ORDER IMPOSING PENALTY OF RS.11,44,348/ - U/S 271CA SINCE THE ASSESSEE DID NOT GIVE ANY VALID EXPLANATION FOR THE SAID DEFAULT NOR WAS ABLE TO ESTABLISH ANY REASONABLE CAUSE TO EXPLAIN THE SAME. 3. BEFORE THE LEARNED CIT(APPEALS) THE ASSESSEE PLEADED THAT THE CAUSE FOR NON COMPLIANCE WAS IGNORANCE OF THE APPLICABILITY OF THE RELEVANT CLAUSE. REFERRING TO THE ASSESSEES SUBMISSION, LEARNED CIT(APPEALS) OBSERVED AS UNDER: FROM THE ABOVE ORDER SHEET IT IS EVIDENT THAT APPELLANT WAS NOT VERY SURE AS TO WHETHER, IN THE GIVEN SET OF FACTS AND CIRCUMSTANCES, TCS WAS REQUIRED TO BE MADE OR NOT AND IT IS ONLY WHEN THE INCOME TAX DEPARTMENT, A M RAVATI ON 07 - 07 - 2011 CONDUCTED A WORKSHOP ON COLLECTION OF TCS THAT THE APPELLANT BECAME AWARE OF THE CORRECT PROVISIONS OF TCS. IT IS ALSO A FACT THAT IMMEDIATELY THEREAFTER, ON 18 - 07 - 2011 ISSUED CLEAR INSTRUCTIONS TO ITS FIELD FORMATIONS VIZ. THE SUPERINTENDENT & DDO DELEGATED BY THE COLLECTOR IN THIS BEHALF, TO COLLECT & CREDIT THE SUM OF 2% TCS DUE ON THE ROYALTY CHARGES CREDITED AT MINING SECTION OF THIS OFFICE. 4. REFERRING TO ANOTHER OFFICE ORDER OF THE ASSESSEE THE LEARNED CIT(APPEALS) FURTHER OBSERVED AS UNDER : 5.2 FROM THE ABOVE NOTINGS IN THE ORDER SHEET AS WELL AS ORDER DATED 18 - 07 - 2011 IT BECOME CLEAR THAT THERE WAS A LACK OF CLARITY IN THE APPELLANTS MIND WITH REGARD TO APPLICABLE TCS PROVISION AND IT WAS ONLY AFTER THE INCOME TAX DEPARTMENT WORKSHOP CONDUCTED ON 07 - 07 - 2011 THAT THE APPELLANT BECAME CLEAR ABOUT THE PROVISIONS OF TCS AN D IMMEDIATELY ISSUED THE SAID OFFICE ORDER WITH REGARD TO RECOVERY OF 2% TCS ON ROYALTY U/S 206C OF THE I.T. ACT. IN SUCH FACTS NO MALAFIDE INTENTION CANNOT BE ATTRIBUTED TO THE APPELLANT THAT COULD RESULT IN A PENALTY U/S 271CA OF I.T. ACT. THUS THERE DID EXIST A REASONABLE CAUSE 3 ITA NO. 379/NAG/2016. WHICH RESULTED IN DELAY FOR COLLECTING TCS AND PENALTY CANNOT BE IMPOSED U/S 271CA IN THE SUCH CIRCUMSTANCES. 5.3 EVEN OTHERWISE THERE IS MERIT IN THE SUBMISSIONS OF THE APPELLANT THAT WHERE THE PERSON HAS FAILED TO COLLECT TAX AN D PAY THE SAME IN THE GOVERNMENT ACCOUNT, PENALTY U/S 271CA IS IMPOSABLE BUT SUCH PROVISIONS WOULD NOT APPLY TO THE CASE OF THE APPELLANT BECAUSE THE APPELLANT HAS COLLECTED TAX AND IMMEDIATELY THEREAFTER DEPOSITED THE SAME TO THE GOVERNMENT ACCOUNT. I AM IN AGREEMENT WITH THIS VIEW. THUS SINCE THE APPELLANT HAS COLLECTED AND PAID THE TAX, THERE WAS NO QUESTION OF IMPOSING PENALTY U/S 271CA. 5.4 THERE IS SUFFICIENT JUDICIAL SUPPORT FOR THE ABOVE VIEW THAT THE PENALTY U/S 271CA IS NOT IMPOSABLE WHERE THERE E XIST A REASONABLE CAUSE FOR THE DEFAULT AND WHEN THERE WAS NO LOSS TO REVENUE. 5. LEARNED CIT(APPEALS) FURTHER REFERRED TO THE DECISION OF JAIHIND PROJECT LTD. VS. ADDL. COMMISSIONER OF INCOME TAX TDS, AHMEDABAD 65 TAXMANN.COM 254 AND SUB DIVISIONAL ENGI NEER (HQ) VS. ADDL. CIT, TDS, CHANDIGARH IN ITA NO. 673/CHD/2012. LEARNED CIT(APPEALS) CONCLUDED AS UNDER : THE FACTS OF THE CASE OF THE APPELLANT ARE SIMILAR. THE APPELLANT WAS NOT VERY SURE OF THE PROVISIONS OF TCS AND ITS APPLICABILITY IN ITS OWN CASE AND IT BECAME AWARE OF THE SAME IN THE MONTH OF JULY, 2011 AFTER THE WORKSHOP OF THE INCOME TAX DEPARTMENT AND HAS THEREAFTER IMMEDIATELY COLLECTED THE TAX AND DEPOSITED THE SAME. THE APPELLANT ALSO PAID INTEREST OF RS.1,67,174/ - TO COVER UP THE DELAY IN COLLECTING THE PAYMENT OF TCS . THUS, IN THE CASE OF THE APPELLANT, THE FAILURE ON THE PART OF THE ASSESSEE WAS A TECHNICAL AND VENIAL BREACH WHICH DID NOT RESULT INTO ANY LOSS TO THE REVENUE AS THE TCS WAS PAID ALONG WITH INTEREST THEREON. IN VIEW OF THE ABOVE FACTS, THE ORDER PASSED U/S 271CA IMPOSING PENALTY OF RS.11,44,348/ - IS HEREBY CANCELLED. THIS GROUND IS THEREFORE ALLOWED. 6. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7. I HAVE HEARD THE LEARNED D.R. NONE APPEARED ON BEH ALF OF THE ASSESSEE. HOWEVER, IN MY CONSIDERED OPINION THE ISSUE CAN BE ADJUDICATED BY HEARING THE LEARNED D.R. AND PERUSING THE RECORDS. 4 ITA NO. 379/NAG/2016. 8. UPON CAREFUL CONSIDERATION I FIND THAT THE REASONABLE CAUSE FOR NON TIMELY COMPLIANCE HAS BEEN ATTRIBUTED TO THE IG NORANCE OF APPLICABLE LAW . T O DEMONSTRATE THE IGNORANCE , T HE ASSESSEE HAS SUBMITTED DOCUMENTARY EVIDENCE BEFORE THE LEARNED CIT(APPEALS) WHO HAS FOUND THE SAME TO BE COGENT. FURTHER MORE THE ASSESSEE HAS SUBSEQUENTLY MADE THE COMPLIANCE AND CLAIMED THAT NO LOSS TO THE REVENUE HAS BEEN CAUSED. LEARNED CIT(APPEALS) HAS FOUND THE SAME AS ACCEPTABLE. FURTHER MORE THE RELIANCE PLACED BY THE LEARNED CIT(APPEALS) ON THE CASE LAWS ALSO SUPPORT THE CASE FOR NON LEVY OF PENALTY. ACCORDINGLY I DO NOT FIND ANY INFIRMIT Y IN THE ORDER OF LEARNED CIT(APPEALS). ACCORDINGLY I UPHOLD THE SAME. 9. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE SANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF OCT., 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 4 TH OCT. , 2016. COPY FORWARDED TO : 1. THE DISTRICT CO LLECTOR, COLLECTOR OFFICE , CAMP, AMRAVATI. 2. I.T.O., (TDS) WARD - 2 ( 2 ), AMRAVATI. 3. C.I.T. - (TDS), NAGPUR. 4. CIT(APPEALS), - II, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGIS TRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.